[IMGCAP(1)]The pressures of shifting global markets, more demanding disclosure requirements and the need for immediate visibility into cash taxes have converged to put more pressure on corporate taxation than ever before. Business leaders, auditors and investors alike are probing for additional transparency into tax numbers. As a result, overworked tax departments are seeing the complexity and volume of their work expand rapidly.

In too many cases, tax teams under pressure to perform new duties using finite resources will hastily adapt a new technology to meet a short-term need. The result? A patch-work approach to tax technology that often leads to underutilization of expensive software licenses, and a general tendency toward inefficient or ineffective technology solutions.

Getting ahead of the new demands requires corporate tax departments to think differently about the resources at their disposal – their people, their culture and processes, and their enabling technologies.  While workloads grow and priorities shift, a strong technology strategy can help ensure the team can meet new and unexpected challenges.

Follow these three steps to mapping a future-proof vision for your tax technology ecosystem.

Assess: Listen, Learn and Plan

Creating a successful tax technology strategy is like planning a road trip. It requires a clear idea of the destination, a budget, and most importantly, a willingness to plan for, and expect, the unexpected. Start with a robust, 360-degree evaluation of the functions the tax department is responsible for performing, and the frequency with which those functions change or expand. 

Before even considering technology, think about the current and future needs and existing resources. Start the planning process by talking openly with the staff who regularly perform key tax functions. Hearing their anecdotal experiences and daily work-arounds can be more insightful than utilization reports or technology inventories.

During the evaluation step, make sure to fully understand the current tools your team uses, and to assess the benefits and challenges of each. Much more than a technology inventory, the goal is to create a tax technology plan that tells the story of where your department has been, what is has achieved, and where it expects to be in both the short-term and distant future.

With a clear understanding of all the individual functions your office performs, begin mapping the technology requirements for each function and identifying the challenges or missed opportunities that exist in the current processes.

When mapping technology solutions, there are three categories to consider:

  1. Existing systems that are currently used by and controlled within the tax department.
  2. Technologies and data sources that the tax team uses, but does not control.
  3. Any installed system or solution that is not being used currently at all. Unused technology tends to fall into two categories: technology which is available, but has not yet been purchased; and technology that was purchased but never implemented. To develop a tax technology plan that optimizes existing resources, focus the bulk of your effort on the last category.

The result of this evaluation will be a clear, fact-based vision of department requirements; potential solutions to meet each requirement; and, a proposed future state for tax technology. In most cases, the resulting plan will be a blended approach that leverages existing applications, better integrates software and processes, reuses data, and implements new solutions. 
Make the Business Case

[IMGCAP(2)]The recommendations have come, and the plan has been constructed. Now is the time to demonstrate to corporate leadership how the new tax technology plan will drive efficiency and empower the business.

The world of corporate tax has changed dramatically in a short timeframe. In the past, making the business case to invest in a new tax technology would focus on time savings or mitigating risk. While those are still valid considerations, today more and more tax departments present their business case in terms of data transparency and informing long-term business strategy.

To be successful, the business case must demonstrate how the new tax technology plan will move your department from reactive to strategic. For example, demonstrate to executive management the great potential value and insights they lose when their tax team is overwhelmed by requests for analytics that are nearly impossible to accommodate with existing tools. 

The insights and business planning support that corporate tax departments can provide are expanding every day.  Tap into the ways this team can add the most value, and focus on those solutions that will enable. Simply put, the climate of corporate tax has changed, so the tax department needs the proper tools to adjust.

Implement Change and Be Open to Refining Along the Way

Congratulations! The decision makers at your company see your wisdom, and have approved your tax technology plan. Now the hard work of implementation begins. Implementations that are rushed or lacking a clear focus will not remedy the problem; instead, they cause greater confusion and a disdain for change that will lead to an inefficient transition process. Properly rolling out new solutions will take longer upfront to ensure all receive appropriate training and on-going coaching to make the most of the new system. Ensure the team culture is aligned to the new technology and processes. Recognize that it’s a not a sprint to the finish line. A deliberate, gentle approach allows all involved members of the tax department to familiarize themselves with the new tools.

Of course, implementation will look different depending on the requirements and solutions selected, but there are common themes.

With any implementation, set reasonable goals that can be achieved during the employee on-boarding process. Team goal-setting will increase staff morale – the key to a smooth transition process. Also, do not underestimate how much timing and sequencing matter when working with technology. Just because you are at the execution and implementation phase with your chosen technology solutions, you cannot risk becoming isolated from the surrounding world. Keep a constant eye on changing requirements from your business, team, investors, and regulators. This way you can identify any obstacles or new demands as they happen, and course correct as necessary during the implementation phase. Keeping flexibility to refine and adjust specifications and processes and being willing to adapt will ensure your solutions are relevant, well-connected, and fit-for-purpose both when the implementation is completed and when the technology is actively in place.

Business legend Jack Welch said, “inventories can be managed but people must be led.” As a leader, it is now your time to take the tax department into an exciting, but potentially challenging, era. People are an integral part of ensuring the success of any technology implementation. Take time to assign each user a clear role as it relates to the new software, systems, and processes. It is a common technology trap for teams to rely too heavily on one individual who has really mastered the system, which can be problematic in the event of turnover or prolonged absence. Remember, the best managers know each member of their team’s strengths and weaknesses and work to create a balance of complementary skills.

Maintain and Reassess

The plan has been written. The business plan has been approved. The technology is implemented. Your department is now well-trained to ensure each new technology is being used effectively. But, like a beautiful garden, a tax technology plan needs regular attention and maintenance.

That’s why the final stage of your plan is to formalize periodic reassessments, or step-backs. This is a time to determine if the overall plan is still aligned with the business’s needs and able to support the scope of the corporate tax department’s functions. This can often be achieved through an open dialogue with colleagues to understand what is working and what is not. Leaders that foster a transparent, solutions-oriented corporate culture within their department will find that people are the greatest ally in re-assessing your technology needs and potentially adjusted for the long-term.

Parting Wisdom

Changing requirements and expanding roles are not novel concepts for corporate tax departments. What is new, however, is the willingness of company leadership to work side-by-side with their tax leaders for a shared vision on the evolution of the tax function, and how it will support the business in one, three and five years.

This vision requires tax leaders to blueprint and follow a clear tax technology plan that aligns business priorities, tax functions and new technology solutions. Well-planned technology strategies will drive the business forward and help avoid an overworked, under-resourced tax department.  

Ryan Lynch is practice leader of Global Tax Management’s tax automation services group, helping clients find technology-related process improvements.He can be contacted at rlynch@gtmgrp.com.

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